According to the market at recent and trusted survey which was conducted between May 12-27, business confidence registered a survey-record low for the third month running.
Only eight percent of the 400 managers of private sector companies forecasted an expansion in activity over the coming year.
“Expectations across agriculture, mining, manufacturing, construction, wholesale, retail, and services were in positive territory in May, albeit relatively subdued.” the survey noted.
Overall, the economic activity contracted for the second consecutive month in May with the PMI dropping to 48.2 from 49.5 in May; readings above 50.0 signal an improvement in business conditions from the previous month, while readings below 50.0 show a deterioration.
Kuria Kamau, Fixed Income and Currency Strategist at Stanbic Bank said the modest decline in business conditions reflected sustained falls in both output and new orders, as well as a
renewed drop in employment.
The costs of producing goods and services remained at an 8-year high driven by rising fuel prices, higher taxes, and input shortages which forced many firms to scale back on output and employment levels.
The rise in output prices, in turn, led to a reduction in domestic demand as clients cut back on spending due to the rising cost of living.
Already, Pwani oil the manufacturer behind the Salit Oil, Mpishi Poa, and Fresh Fry cooking oil products has announced the temporary halt of its operations citing among others the dollar shortage witnessed in the country which has taken a toll on several manufacturers.
In terms of employment, May reported a decline in employment with most firms reducing their staffing capacity amid lower sales.
“Others added to their workforces to support output and gain new customers,” the survey noted.
By Capital fm